Frequently Asked Questions

Q?
What is a wage garnishment?A wage garnishment is any legal or equitable
procedure through which some portion of a person's
earnings is required to be withheld by an employer
for the payment of a debt. Most garnishments are
made by court order. Other types of legal or equitable
procedures include IRS or state tax collection agency
levies for unpaid taxes and federal agency administrative
garnishments for non-tax debts owed the federal
government. Wage garnishments do not include voluntary
wage assignments - that is, situations in which
employees voluntarily agree that their employers
may turn over some specified amount of their earnings
to a creditor or creditors.

Q?
What is the protection against discharge when wages
are garnished?
A The CCPA prohibits an employer from firing
an employee whose earnings are subject to garnishment
for any one debt, regardless of the number of levies
made or proceedings brought to collect that debt,
because of the single garnishment. The Act does
not prohibit discharge because an employee's earnings
are separately garnished for two or more debts.

Q?
What are the restrictions on wage garnishment?A The amount of pay subject to garnishment
is based on an employee's "disposable earnings,"
which is the amount left after legally required
deductions are made. Examples of such deductions
include federal, state, and local taxes, the employee's
share of State Unemployment Insurance and Social
Security. It also includes withholdings for employee
retirement systems required by law. Deductions not
required by law - such as those for voluntary wage
assignments, union dues, health and life insurance,
contributions to charitable causes, purchases of
savings bonds, retirement plan contributions (except
those required by law) and payments to employers
for payroll advances or purchases of merchandise
- usually may not be subtracted from gross earnings
when calculating disposable earnings under the CCPA.
The law sets the maximum amount that may be garnished
in any workweek or pay period, regardless of the
number of garnishment orders received by the employer.
For ordinary garnishments (i.e., those not for support,
bankruptcy, or any state or federal tax), the weekly
amount may not exceed the lesser of two figures:
25 percent of the employee's disposable earnings,
or the amount by which an employee's disposable
earnings are greater than 30 times the federal minimum
wage.

Q?
To whom does the law apply?
A The law protects everyone receiving personal
earnings, i.e., wages, salaries, commissions, bonuses,
or other income - including earnings from a pension
or retirement program. Tips are generally not considered
earnings for the purposes of the wage garnishment
law. The law applies in all 50 states, the District
of Columbia, and all U.S. territories and possessions.

Q?
What about child support and alimony?A Specific restrictions apply to court orders
for child support or alimony. The garnishment law
allows up to 50 percent of a worker's disposable
earnings to be garnished for these purposes if the
worker is supporting another spouse or child, or
up to 60 percent if the worker is not. An additional
5 percent may be garnished for support payments
more than l2 weeks in arrears.

Q?
Which Federal law regulates wage garnishment?A The Federal Wage Garnishment Law, Consumer
Credit Protection Act's Title 3 (CCPA) limits the
amount of an employee's earnings that may be garnished
and protects an employee from being fired if pay
is garnished for only one debt. Title III is administered
by the Wage and Hour Division of the Department
of Labor's Employment Standards Administration.
The Wage and Hour Division has no other authority
with regard to garnishments. Questions over issues
other than the amount being garnished or termination
should be referred to the court or agency initiating
the withholding action. For example, questions regarding
the priority given to certain garnishments over
others are not matters covered by Title III and
may be referred to the court or agency initiating
the garnishment action.

Q?
Are there any exceptions to the law?A The wage garnishment law specifies that
the garnishment restrictions do not apply to certain
bankruptcy court orders, or to debts due for federal
or state taxes. If a state wage garnishment law
differs from the CCPA, the law resulting in the
smaller garnishment must be observed. You may be
able to claim one or more exemptions and avoid paying
the judgment or at least a portion of it.

Bank
Account funds that are from:

Veterans
Benefits
Child Support Payments
U.S. Government Pension
Unemployment Compensation
Supplemental Security Income (SSI)
Temporary Assistance for Needy Families
Certain funds in a joint or community account
Other public Assistance or Income allowed by State
Law

In
order to protect your right to claim these exemptions
you must, within 28 days from the date on the Writ
of Garnishment, deliver to the court clerk and mail
a copy to the plaintiff, the completed Exemption
Claim Form.

Employers
FAQ

Q.
Do I still have to comply if my employee's pay is
already garnished?

A.
Yes. You must comply, but the amount you withhold
may be reduced. The law (15 USC § 1673) imposes
a maximum on how much can be garnished at any one
time. Currently, that maximum is 25 percent of the
employee’s disposable pay until the prior garnishment(s)
are satisfied or expired.

Administrative
wage garnishment orders (AWG) don't expire, although
some garnishments do expire before the full amount
has been paid. Once a prior garnishment expires
or is satisfied, the next garnishment in line usually
takes over.

The
same federal law that imposes a garnishment maximum
also protects a "floor" level of income
equal to 30 times the federal minimum wage per week.

Q.
Can I ignore the Order if state law forbids wage
garnishment?

A.
No. AWG is authorized by a Federal law (20 USC §
1095a), which specifically preempts state law.

Q.
What do I do if the Order says to send payments
to someone other than OCAP?

A.
Send the payments to the payee listed in the Order.
Guaranty agencies such as OCAP are permitted to
retain others to aid in the administration of the
AWG process including the collection of payments
under an Order.

Q.
What if my employee works part-time and doesn't
make enough to be withheld?

A.
A non-compliant employer will be liable for and
subject to suit by OCAP to recover any amount the
employer fails to withhold after receipt of notice
of the AWG Order, plus attorneys’ fees, costs and,
at the court’s discretion, punitive damages.

Q.
Do I have to honor an AWG Order that isn't signed?

A.
Yes. The law (20 USC § 1095a) doesn't require that
the Order be signed to be valid and legally binding.
However, if you have any question about the Order’s
authenticity, please contact
us.

Q.
Can I impose a fee for administering this? If I
can, who pays?

A.
The statute and regulations authorizing AWG don't
provide for an employer processing fee. This is
an issue that you should discuss with your legal
advisor.

Q.
What should I do if my employee filed for protection
under bankruptcy?

A.
Contact us and include
a copy of the 341 Meeting Notice or provide the
case number, district, date of filing and the state
where the action was filed. While we must cease
our collection efforts during an active bankruptcy,
please be advised that student loans are non-dischargeable
in most cases.

Q.
What should I do when I get a balance letter?

A.
Update your records. Balance letters are sent periodically
to keep you informed of the current outstanding
balance.

Q.
Do I also have to garnish my employee's bonus/commission
check?

A.
Yes. You must withhold 10 percent from all monies
paid to the employee. Some restrictions do apply
to some payments of workers' compensation, disability,
etc.

Q.
Does my employee have to consent to the order or
sign the paperwork?

A.
No. The information and forms sent to you are for
your use only. There's nothing in the packet that
requires the employee’s signature.

Stop or Remove IRS Levy

When
the IRS puts a wage garnishment on your paycheck
we can remove and stop it today, contact our team
of professional CPA's that will speak directly to
the IRS so you don't have to and get you back in
good standing with the IRS.